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The Second Industrial Revolution (c. 1850 - 1900)
Economics of Growth • Major factors of the Second Industrial Revolution: • New technologies introduced. • Production in large factories • Increased consumer spending • Greater availability of capital • Spread of industrial production • Increase in population growth
New Technologies • The Bessemer Process of steel making developed in 1856 made steel production easier and more cost effective. • The development of electrical power (begun by Michael Faraday in 1831) to operate machinery and electrical power grids in cities made power more accessible. • The light bulb, developed by Thomas Edison in the 1870s gave impetus for electrical development.
New Technologies • The development of oil and the internal combustion engine made shipping more viable and led to the development of the automobile by Rudolph Diesel, Gottlieb Daimler, and Karl Benz. • The development of the telegraph in the 1840s and 1850s and the invention of the telephone by Alexander Graham Bell in 1876 made communications faster than ever before. Rudolph Diesel
Business Practices • Industrial organizations reached as greater scale than ever before. • Cartels (large firms that dominated an industry) became commonplace • Krupp in Germany • Vickers Armstrong in England • Schneider-Creusot in France • Modern banking structures provided capital for new business ventures.
Consumer Economy • With the development of mass culture, the consumer economy grew dramatically. • The introduction of sophisticated advertising, department stores, inexpensive luxuries, and personal credit allowed the middle classes to buy more than ever before. • Mass circulation of newspapers and magazines added to this trend for communication and marketing.
Spread of Industrialization • In the middle to late 19th century, industrialization spread and increased pace in France, Germany, Italy, the Low Countries, the United States, and Russia. • Continental Europe and the United States had advantages in development due to the fact they were “new” industrial powers, their technology was new, were the British technology was older and business owners were weary to replace it.
The Long Depression • Despite the introduction of new technologies, the growth of consumer culture, and the gospel of free trade, Europe and much of the world faced economic depression from the 1870s to 1896. • Prices, profits, and interest rates fell. • Growth in one sector led to decline in several others. • Governments reverted to protectionist policies and imperialism to help stimulate their economies.
Agriculture • Despite higher demand for food, agricultural populations across the continent continued to decline. • The introduction of chemical fertilizers, machinery, and easier transportation led to increased competition and specialization (Danish cheese, French wine, etc.) • Global agricultural trade led to greater interdependence, cheaper prices, and greater selection of goods.
Demographic Changes • The population of Europe nearly doubled in the period from 1865 to 1914. • This occurred during a major demographic transition (falling birth and death rates). • This led to smaller families (fewer children born if more are going to survive) and an older population. • This was largely due to improved sanitation and medical care (eliminating diseases such as typhus and cholera), and increased nutrition.